The recent Greek debt buyback announcement and apparent softening of German rhetoric on the troubled eurozone (EZ) member-state represents a short-term boost to morale, Nouriel Roubini told the Wall Street Journal recently, but does not change fundamental flaws in the structure of the EZ, and within Greece’s economic model. Roubini had previously held that Greece was likely to exit the EZ in H1 2013 due to a Hydra of sovereign, fiscal, banking and competitiveness crises, but told WSJ reporter Harriet Torry that if the currency bloc could agree to a transfer union, Greece could remain in the EZ:

“You have to realize that the problems of Greece are long-term, it’s going to take 10 to 20 years to do the austerity and the reform to stabilize Greece and therefore you have to give money and you have to be patient.”

Policy makers have spent numerous summits mulling over how to ring-fence Spain and Italy from Greece, and facilitate an orderly exit. But, ahead of 2013 elections, German leaders have realized that there is “no such thing” as an orderly exit:

“I think the Germans have realized that if there was a disorderly collapse of the euro zone, the loss and the damage would not be just for Greece, Ireland, Portugal, Italy, Spain — but also for Germany,” which, as a creditor of these countries, would see its own financial institutions and government shoulder the burden of a bankruptcy…A disorderly collapse of the euro zone is not in anybody’s interest.”

Nouriel continued to argue for backloaded austerity, noting the crippling effects on growth policies directed by the EZ core and troika have had on periphery countries.

2613657 Responseshttp%3A%2F%2Fwww.economonitor.com%2Fnouriel%2F2012%2F12%2F06%2Fnouriel-explains-more-positive-outlook-on-greece-to-wsj%2FNouriel+Explains+More+Positive+Outlook+on+Greece+to+WSJ2012-12-06+19%3A29%3A28Nouriel+Roubinihttp%3A%2F%2Fwww.economonitor.com%2Fnouriel%2F%3Fp%3D261365 to “Nouriel Explains More Positive Outlook on Greece to WSJ”

Hopefully an American austerity plan will so devastate the economy that fear will enable the action needed to revive the economy. Only refinancing working America with a huge increase in the mininmum wage, a huge increase in expenditures for personnel and infrastructure and an even larger increase in taxes will work. We prospered with much higher taxes in the ' 50s, and '60s while paying for a war and a national highway system.
It is time for a New Deal.

You can't help but feel a little sorry for Greece… They've had quite a bit of significant bad luck over the past 4 years. Even, it was only two months ago that 9 million of the national residence nearly had their identities stolen….

more money to the goverment will not help anyone except goverment workers and politicians. why do you trust them to spend other peoples money wisely? during the 50 – 60's the US had 70% of the world manufaturering capacity with less regulation. No longer – other countrys' are following the capitalist road.
tell me – is it a world economy now?

Actually, I don't feel too sorry for Greece. They have brought this on themselves. No one forced them to lie about government finances, to overpromise, to spend too much. I don't feel sorry for the binge drinker who wakes up the next morning with a spitting headache. They brought it on themselves.

Wow, now Cyprus…. I totally agree with the blog. The Germans have got to be a little worried to say the least. I'm just hoping that the UK will never enter the Euro. I don't think we will but the Pound Sterling is an identity I don't want us to lose but that would obviously be the least of my worries if we entered the Euro.

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Richard has published papers on wages policy, the taxation of financial arrangements and macroeconomic issues in Pacific island countries. Views expressed in these articles are his own and may not be shared by his employing agency. He is the author of How to Solve the European Economic Crisis: Challenging orthodoxy and creating new policy paradigms

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